Going for Broke

By Julie Short

The economy has created quite a healthy real estate
market--which means that earnings are ripe for the picking.
This potential income, along with fast-paced, yet flexible
work-days, makes real estate an appealing alternative for
people who dread the idea of sitting at a computer all day.

"It's not a race, it's a marathon. If you treat it like a race,
you're going to lose." - Christopher Haas

In real estate, there's a well-known and oft-quoted
axiom: "Ten percent of agents make 90 percent of the money."
With these odds, why would anyone choose this line of work?
"Unlimited earning potential, for one," says Andy Eichberg,
28, a real estate advisor in Washington, D.C. "You can be 22
and make just as much as someone who is 45 if you catch some
breaks." And right now, it's easier than ever to catch a
break. The economy has created quite a healthy real estate
market--which means that earnings are ripe for the picking.
This potential income, along with fast-paced, yet flexible
work-days, makes real estate an appealing alternative for
people who dread the idea of sitting at a computer all day.

Despite these advantages, real estate is not for everyone.
All the agents we talked to agreed: you have to be
aggressive--a go-getter who won't take no for an answer; a
people person; a good time-manager; someone who's not in it
for the short-term return. If you're any or all of the above,
real estate may be the career for you.

Before we delve any further, let's start with basic
definitions. Both agents and brokers help people buy,
sell, or rent properties. An agent is essentially a
salesperson and must work with a licensed broker. A broker
provides a host of services in addition to sales, including
appraising property, negotiating purchase, sale, or lease
agreements, and maintaining escrow accounts. In most states,
you must become a licensed agent before you can become a
broker.

So, will you find instant success in real estate sales if
you're the kind of person who could sell sunshine in Florida?
Not necessarily. It takes much more than that to rent an
apartment or sell a home. Organization is key, as well as
confidence in your own abilities. "Your sense of self-worth
is often linked to your job," says Tim Lauben, 26, a
Boston-based real estate agent. "If you don't make a sale for
several months, you can't let it get you down. Out of 100
cold calls, you may set up 10 meetings and get one
client--and that can get pretty depressing at times," he
says.

Besides having the strength to persevere, it helps to be a
sympathetic soul. That's because there is a huge emotional
component to people's decisions about where to live. Kristin
Lawton, 29, a realtor in Philadelphia, believes that's one
reason there are so many women in real estate--85 percent of
real estate professionals in this country are women. "Women
deal with people's emotions better and can relate to a
couple's attachment to a particular home," says Lawton.
Whether you agree with her or not, the fact remains that
being a people-person is critical to succeeding in the real
estate field.

But according to Christopher Haas, 27, an agent in Wayzata,
Minnesota, having some money in the bank is even more
important than being able to deal with people's emotions.
"You'll need at least six months' worth of living expenses,"
he says. "And that's on the low end, because you may not see
a paycheck for several months after you begin the job." Haas
was fortunate enough to join his father's real estate
business, which was already thriving in a Minneapolis suburb.
He receives a percentage of everything his father and partner
earn in exchange for managing the administrative side of the
business. Lauben, on the other hand, worked two jobs to save
up enough money to make the transition to real estate. He
suggests that newcomers start with rentals--"you'll see a
paycheck a lot sooner, since it can take months to sell a
house," he says.

To get started, research licensing requirements in your area,
because they vary from state to state. To determine the local
requirements, contact your state's Division of Registration
(the name of this division or entity may vary from state to
state). In Massachusetts, for example, you must complete the
requisite education--24 hours at any state-approved real
estate school--and pass an examination. Courses will run you
approximately $200, the exam about $100, and the licensing
fee around $50. (For a list of schools in your area, look in
the Yellow Pages under "real estate.")

Once you pass the examination and become a certified real
estate agent, your next step is to find a home base. Most
real estate agents we talked to recommend starting at an
established real estate company as an independent contractor.
But Haas suggests doing a fair amount of research on local
agencies before selecting one. "Even though the pay structure
may be less attractive at a larger agency, it's still a good
idea to sign on with one that has a good reputation," says
Haas. "Your name on its own is nothing. With the backing of a
big company you get name recognition right away and will be
more likely to get better clients."

As an independent contractor, you pay a percentage of your
commissions to the agency in exchange for a desk and a
computer at the main office, and to cover administrative
costs. "What you are really paying for," says Eichberg, "is
an established and reputable name to put on your business
card."

Some agencies offer new salespeople the option of
participating in a mentoring program. A senior-level agent
will take you under his or her wing and involve you in deals
in exchange for a partial split of the commission or a lump
sum. Plus, "You get exposed to a different level of
business," says Eichberg. But be prepared for grunt work.
"You'll sit at their open houses, drop off their film, and
distribute brochures," says Lawton. Another option is to look
for a firm that offers newcomers a "draw," or advance on
their salary--anywhere from $25,000 to $40,000 for the first
year. This option is more common in commercial real estate
than residential. "You get a paycheck every two weeks," says
Eichberg, "but everything you make after that year goes
toward paying back the draw."

Flexibility is one of the main benefits of working in real
estate. Sure, you're your own boss, says Eichberg, "but
the reality is that the guy who comes in at 7 a.m. is going
to make more than the guy who strolls in at 10 a.m."

Haas also shakes his head at the long hours. "Your social
life deteriorates," he says, "because you have to be
available when the clients are." Expect to work late hours
and weekends for the first couple of years without seeing a
big return. "At our offices we always say, 'It's not a race,
it's a marathon,'" says Haas. "If you treat it like a race,
you're going to lose." In other words, you may need to
cultivate a client for several years before you profit from
the relationship.

For Lawton, flexibility was a necessity. When she entered the
business two years ago, she and her husband knew they wanted
to start a family in the near future. "I was working in
retail, and I wanted a job that was a little less
structured," she says. Today, she splits her time between
home and office as she cares for her newborn baby.

All four brokers recommend networking with local businesses
and civic groups. Eichberg says that he's active in charity
organizations and the Greater Washington Board of Trade.
Haas, too, is a member of his local chamber of commerce. "You
need to do anything to let people know you're in the
business," says Lauben, "so that when they want to buy or
rent a house, they'll come to you first."

Although you may work long hours in real estate, you're
definitely not glued to your chair watching the clock. "I
leave the office for appointments at least four or five times
a day," says Lauben. "I get to drive around to meet people
outside of the office in different settings--and they call
this work?" Don't be misled, however--there's still the
obligatory desk time and cold calling to be done. Lauben says
when he gets into the office in the morning he checks mail
and reads the daily update from the Multiple Listings
Service, which highlights new listings and properties sold.
He follows up on tips on apartments for rent or folks looking
to buy a new home. Plus, there are numerous calls back and
forth with potential buyers who want to know more about a
property.

Ultimately, the biggest lure of the real estate profession is
the unlimited income, says Haas. "No one will ever tell you
how much you're going to make in a year. You decide yourself
by setting your own goals." But if your objective is to make
a lot of money quickly, he adds, "then you're doing the wrong
thing." Residential real estate agents usually earn between
$20,000 and $40,000 in their first year. Obviously, the
longer you stay in the business and the more contacts you
make, the greater the earning potential. But the lure of
earning beaucoup bucks with one sale can be a bit addictive,
admits Haas. "This profession is for those who think $40,000
a year isn't enough, $75,000 isn't enough, and then even
$100,000 isn't enough," he says. "The sky's the limit."

Julie Short is an associate editor at The Improper
Bostonian magazine--but she is considering a move to the
more lucrative field of real estate.

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